Evidence of Sustained Russian Corporate Growth despite International Liquidity and Trade Shocks

ABSTRACT

This paper employs an institutional perspective as part of our approach to measure long-run performance of Russia’s largest firms. Our dataset is based on financial information on Russia’s fifty largest and most prominent firms, from 1998 to 2016. Our results indicate that such firms benefited from long-term government lending, particularly in the aftermath of financial and terms-of-trade crises. While recognizing the important role played by Russia’s Stabilization Fund, we argue that Russia efficaciously adapted its institutional framework to ensure that Stabilization funds maintained industrial and economic stability.

KEYWORDS:

• Long-term subsidized loans
• industrial stability
• Russia

JEL CLASSIFICATION:

• P26
• O16
• O25

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. We are primarily interested in the Russian banking system, as the Russian bond market remains under-developed (Popova et al. 2017) and bank credit and equity issues remain primary sources of finance. The prevalence of bank credit over corporate bonds can be explained by a concentrated bank market, as well as the frequency of economic shocks (such as the global financial crisis, introduction of sanctions and drop in oil price) that hinder bond market development.

2. We also account for firms that are owned by the state indirectly.

3. We also note that R squared, Wald-chi squared and F-values have increased substantially.